Sales of foreclosed homes accounted for 42% of existing-property transactions in California in August, research company MDA DataQuick said Oct. 15. The Realtors said the number of existing houses sold climbed 2.1% last month from September 2008, boosted by lower prices and a federal tax credit for first-time homebuyers.  “The success of the federal tax credit is clear,” James Liptak, president of the California Association of Realtors, said in the statement. The group supports an extension of the credit through mid-2010 and the removal of its restriction to first-time purchasers.  

California, the most populous U.S. state, is on pace for 530,520 home sales this year, based on the rate of transactions last month, the association said.  “Efforts by the government to stimulate housing and the economy clearly are impacting the market,” Leslie Appleton- Young, the group’s chief economist, said in the statement. Sales have exceeded 500,000 homes on an annualized basis for 13 consecutive months, she said.

The median amount of time it took to sell a California house fell to 33.6 days in September from 46.2 days a year earlier, the association said. The group’s unsold inventory index for existing, single-family houses dropped to 4.2 months from 6.5 months a year earlier. The index shows the time needed to deplete the supply of homes on the market at the current sales rate.   The median price for a California condominium in September was $270,170, down 6.5% from a year earlier and up 3.8 % from August, the Realtors association said. Condominium sales rose 11% from a year earlier and 2.2% from August.

In Merced, 53.4% of sales were home foreclosures and 4.8% were California short sales. In nearby Stockton, 51.1% were foreclosures and 5.4% were short sales.  “As more markets turn down and markets that were already down go deeper, the pace at which value is being erased from the U.S. housing stock is rapidly increasing,” said Stan Humphries, Zillow’s vice president in charge of data and analytics.   To give you ideas of just how fast home values are depreciating, a recent Zillow home value report indicated that “more home value was wiped out in the 4^th quarter of 2008 than was eliminated in all of 2007,” Humphries said.

About $3.3 trillion in home equity was erased in 2008, with $1.4 trillion of that wipeout coming in the fourth quarter alone, according to Humphries. More than $6 trillion in home equity has disappeared since home values hit their peak in 2005.  These home equity losses have buried many homeowners underwater, where they increase significantly for home loan default. Unfortunately these struggling homeowners do not have the option of cash out refinancing or taking out a home equity loan or second mortgage to raise capital needed to pay medical bills, credit cards and mortgage payments.  Bankruptcy, debt settlement and consumer credit counseling figures continue to soar.

A according to Zillow, 17.6% of all homes are now underwater in the United States.  Of those under-water homes, 41.2% of these mortgage loans came from homes purchased in the past 5 years.  The worst value stricken cities are located in the where the sun shines bright. In Las Vegas, 61.4% of all residential properties are underwater.  Because so many houses are worth less than their home loan balances, an increasing number have to be sold short. But short sale transactions still take a long time to close, because most lenders are unable to keep up with the rising demand of loan modification requests.   Mortgage lenders may not approve short sales for months. The deals cannot go forward without their approval, because the banks must agree to forgive the difference between what they are owed and what the sale brings in.   As the time it takes to arrange short sales lengthens, they become harder to complete. 

Les Christie wrote about one example of how home sales declines can also kill a short sale occurred recently in Phoenix. Curtis Johnson, a real estate broker there, worked with a health care worker whose hours were being cut and who could no longer afford her mortgage loan. She fell behind on her mortgage payments and decided to sell the home.  Johnson was able to find a home buyer willing to pay $183,000 and got a FHA loan approved by a lender. The owner confidently moved out, got a new place and started a new life. But the lender folded and the mortgage went to a new servicer, who took six weeks to approve the deal.  “Unfortunately, the buyers who were approved were no longer interested because the real estate market declined so rapidly,” Johnson said. “They wrote a new home sale offer, which was significantly lower than the original offer but it was time to punt and start over.”  See original article >

The area’s median price, which reflects the midpoint of sale prices, hit $505,000 in mid-2007, DataQuick said.  A total of 19,926 new and resale homes and condominiums were sold and purchased last month in the 6-county region that is the most heavily populated area in the state of California.  The area, including such cities as Los Angeles, San Diego and Riverside, recorded 13,240 sales during December 2007.  The median price paid for homes sold in Southern California hit $278,000 in December, down from $425,000 in December 2007.  DataQuick said the drop in the median price “overstates the decline in home values” since more affordable homes in the foreclosure-hit inland markets accounted for a large portion of sales. The Southern California foreclosure sales accounted for 55.7 % of December’s re-sales, up from 24.3 % in December 2007.

California’s residential real estate market was one of the most expensive in the US during the years-long housing bubble. The state is now struggling with one of the country’s highest foreclosure rates after many buyers got in over their heads with debt Formerly sidelined buyers are rushing to snap up foreclosed homes, but many would-be buyers in expensive markets remain on the sidelines because financial institutions are reluctant to make so-called “jumbo mortgage loans required to pay for homes in California’s many high-price neighborhoods.  John Walsh, president of DataQuick said, “Mortgage interest rates last month were near record lows … It does look like the spigot is being opened a little bit, at least for reduced home purchases.”  Read the complete article. 

As proof of these buying trends, the number of San Diego foreclosure properties for sale in the next 90 days has dropped by fifteen percent: 3,979 San Diego foreclosure properties are scheduled for auction in the next 90 days, down from 4,589 in October 2008. Currently, there are approximately 7,000 San Diego homes and properties in the pre-foreclosure phase, down from more than 10,000 at the end of September 2008. Owners of San Diego real estate properties that are in pre-foreclosure have received a Notice of Default to alert them that a foreclosure auction is pending. Overall, however, San Diego bank-owned properties are decreasing as investors are buying up many of the foreclosure properties.

Brian Yui, CEO of HouseRebate.com, states that “there are countless opportunities for investors to buy San Diego distressed properties and achieve positive cash flow with only 25% down. Opportunities of this kind have not occurred in San Diego for over a decade. Because home purchase prices have dropped back to 2003 price levels, but rents remain at 2008 levels, in some San Diego suburbs a single-family detached home can be purchased for $200,000 and still rent for $1600 per month.” Due to these money-making opportunities, many of bank-owned listings are seeing multiple offers as San Diego real estate investors bid against eager first-time homebuyers.